2018/12/10

Securing a victory in the Snoras bank’s bankruptcy case in the Vienna International Arbitral Centre

In 2016–2018, senior associate and lawyer Greta Roguckytė, working with the WINT’s legal team, represented Snoras bank in a dispute with Austria’s Meinl Bank in the Vienna International Arbitral Centre.

The bankruptcy administrator of Snoras bank initiated court proceedings against Meinl Bank back in 2015. The Austrian bank filed a claim against Snoras with the Vienna International Arbitral Centre asking that the arbitral panel rule that Snoras’s funds in the amount of €11 million were pledged as collateral in favour of Meinl Bank and that the bankruptcy administrator did not have the right to request repayment of these funds.

The Vienna International Arbitral Centre issued a ruling whereby Meinl Bank’s claim against Snoras was dismissed. It was established that the collateral agreement concluded between Meinl and Snoras bank in 2011 was to be considered null and void according to the Austrian law.

The investigation found that Meinl Bank lent money to off-shore companies but the actual lender was not the Austrian bank itself: banks based in Lithuania, Latvia and Ukraine issued guarantees for each loan in question, depositing large amounts of money in special accounts with Meinl Bank. In case of default, Meinl Bank took possession of their money. This way, large amounts of money ended up in the hands of off-shore companies. Meanwhile, Meinl Bank which acted as an official issuer of loans to these companies did not assume any risks. The collapsed banks were the ones to suffer losses along with the three states which had to carry the burden of millions of euros lost through Meinl Bank.

The court victory achieved in this case ensured the possibility of the repayment of €11 million to the assets of the entity undergoing bankruptcy from the Austrian bank which assisted the former shareholders to misappropriate the bank’s funds.

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